Bharat Earth Movers Ltd. (BEML) is entering the capital market on 27th June, 07 with a public issue of 49 lakh equity shares of Rs.10 each. As usual, for a FPO, the price band would be announced by the company one day before opening of the issue. CMD of the company, Mr. V R S Natarajan in a recently held press conference had stated that the company wants to mobilize about Rs.450 crore from its proposed issue. Even, the fund requirement is estimated at around Rs.430 crores, excluding issue expenses and general corporate purposes.
So, if we make a backward calculation, price may get discovered at Rs.920 per share and hence the price band may be between Rs.900 to Rs.950 per share. Not bad at all! Share is presently ruling at Rs.1,150 with 52 week high/low of Rs.1,270 and Rs.790 respectively. Atleast, good scope is left for the prospective investors to earn. Not overtly aggressive like ICICI Bank. That could be the reason why no discount of 5% has been kept for the retail investors to attract them to the issue.
The company operates in three business segments - construction and mining equipment, defence products and railway & Metro products. The present equity of Rs.36.75 crores will rise to Rs.41.65 crores and Government will hold 54.03% of enlarged equity. The company has orders to the tune of Rs.1,200 crores as on 28-02-07. The company's mining and construction equipment contributes about 63% to its turnover. The company is a pioneer in Metro Coach manufacturing in India and supplied to the Delhi Metro Rail Corporation.
The company is expanding its Metro Coach manufacturing facility at Bangalore, at a cost of Rs.215 crores. Upgradation, VRS, and windmill have an outlay of another Rs.215 crores. Total requirement is being met from the proposed issue.
The company has posted an EPS of close to Rs.50 for FY 06 and growth is likely to continue for following years and moreso, post expansion. The share is worth investing in as long as its price band remains at Rs.1,000 at the upper levels.